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Financial Advise | Light at the end of the financial tunnel?

March 31, 2020

While our lives are currently being affected in so many ways, it's the perfect time to turn to those who have valuable and positive insights to share with us. At Art in Voyage, we're fortunate to have a list of incredible past guests who we will be featuring over the next few weeks! Health, fitness and wellness, financial, cooking, and travel are the topics we will be shedding light on. To kick things off, we're featuring Brad Ledwith, Financial Advisor from Ledwith Financial Wealth Management. Trust us, you're going to love Brad's party analogy in his last answer!

During what has been announced as one of the greatest economic challenges since 1930, what can people do to stay financially sound right now during the COVID-19 pandemic?

Obviously, the best way to endure economic challenges is before they happen. Most of the economic issues of my business career have come as a huge surprise. Vow to yourself now, that you will get through this and then you will have 6-12 months of emergency funds for emergencies. A credit card with a limit on it is not an emergency fund!

As for maneuvering, my suggestion is to always sell your major losers…you know those ones you’ve held on to since 2008 waiting for them to come back. Wake up folks, it’s been 10 years and they still haven’t come back. BP Oil is that one for me. It’s done nothing for 10 years. This financial market downward trend has allowed me to free myself from stocks that aren’t producing like they used to.

For those of us with cash on hand, what would be your best recommendation?

This is a difficult question because I don’t know each individual’s situation. As for investing, if you are a gambler, all the travel companies have suffered huge losses…will they survive? Outside of the travel industry, look for those companies that have a lot of cash on hand…they will be able to weather this storm. For example, the fruit company has a lot of cash and it’s still valued at $1Trillion!

For those with 401ks and IRAs looking at the markets crumbling, what would you recommend doing, & most importantly, how should people look at this?

This is the best time in 10 years to be pumping money into your 401k/IRA!
Seriously, everyone wants to see their balances go up every month, but in reality, this is the best buying opportunity we’ve seen in 10 years. So, if you can ask your HR department to pump up your percentages while the market is down, you’ll be able to buy more shares when the value of those shares is lower.

Lastly, in any crisis, please put time on these events. 5 years from now you’ll be telling yourself 2 things, “I wish I had or I’m glad I did!” Most 401ks and IRAs are long term investments and you should look at this time to invest.

It has been announced that most households should be getting a check from the U.S. government. What would your best advice be once that check is received?

This is an “it all depends question”. If you need the money to live on, spend it wisely.
If you don’t need the money, I’d buy the most aggressive stock I could find at this point and time…Maybe Boeing? Or go to the casino (when they open) and lay down $2,000 on Red on the roulette. You have a better than 48% chance of winning. And the income is tax-free. One of the best ideas I’ve heard is to invest the money and then give it away in 5 years!

What lesson is to be learned from the COVID-19 pandemic- which sneaked up on all of us - while being quite comfortable in what had been the longest period of economic growth in a very long time?

Save some, give some away, and live on the rest. You’ll be a rich person in so many ways if you practice this basic principle.

With that, we are all taught about living below our means. Save for a rainy day. I could go on, but please commit to yourself that you will have an emergency fund when this is all over. I don’t care if it’s in your sock drawer or in a money market type of account…we all need a rainy day fund. It gives us peace!

For every action, there is usually an equal and opposite reaction. What can we expect with regards to the economy once we have passed this crisis?

We have been through this before. Every time someone says, “this time it’s different”, remember it’s usually the same in some way. It feels different but when we look back 5-10 years from now, we will be fine. Typically what will happen is the governments will backstop this huge downturn and we will dig and claw our way back to even.

Any crisis that we’ve experienced follow the same pattern as a party….ice breaker, a few drinks, a cool buzz, I’ll have another, oops I partied too long, and then the hangover. We’ll see this party start in about 7-12 months and we’ll be toasting to getting back to even in 12-24 months. Then we will be partying again and some will drink too much and get hungover. It’s important to remember that nothing good happens after midnight. So when this economy comes back, remember the party analogy and enjoy a few drinks but go home and get some sleep!

Investing is hard and easy at the same time.

I’ve been doing this thing for 23 years. Every time the financial market has gone down, it’s gone back up. Every time the market has gone down, the market has gone back up to set new highs. So why do people lose money in the markets…they sell.